The cumulative impact of increasing cost differences between tiers and the increasing availability of respected generics represents an altogether new marketing challenge for pharma managed-care executives. This challenge centers on the emergence of consumer marketing within health plans, something that pharma managed-care executives have usually not had to address. In the years ahead, consumer marketing in health plans may prove to be just as critical to a product's success in managed care as formulary position. These two thrusts in health plans—consumers and formulary considerations—represent a dual marketing focus managed-care executives will need to address in the future.

The pharma marketing model has traditionally been based on brand marketing, which has three focal points. The first point involves development of a product's information platform: product identity, positioning, messaging, and advertising. The second involves healthcare professionals: detailing, education, and other forms of communication. The third involves consumers, particularly direct-to-consumer (DTC) advertising.

Managed-care marketing flows out of brand marketing and has five focal points. First is contracting. Second is account management. Third is program and resource support, such as disease management, education, and analytics. Fourth is pull-through support. And fifth is coordination with field sales.

Dual Focus

With out-of-pocket drug costs rising and copay differences between tiers widening, pharma executives can expect more health plan members to raise financial questions about branded products their doctors select. "Do I ask for a generic?" "Do I tell my doctor, 'Only products on the second tier'?" "Do I explain, 'There is no way I can afford all that medication for my family'?"

Assume, for example, that a manufacturer's managed-care team gets its product on the second tier, helps to implement an effective disease management program, and successfully promotes physician education. If, depending on their purchasing decisions, individuals face a monthly $100-plus swing for multiple medications, and families face a monthly $200-plus swing, it is far from certain patients will automatically comply with what their doctor prescribed.

This tendency had been documented in studies of insured populations before the 2003-2004 wave of significant cost-shifting took effect. In a study published in the Journal of the American Medical Association and summarized in the Wall Street Journal, researchers found that "when copayments doubled, the use of prescription drugs fell between 17 percent and 23 percent among patients with diabetes, asthma, and gastric acid disease." A few months earlier, in a Harvard Medical School study published in the New England Journal of Medicine, also summarized by the Wall Street Journal, researchers found that due to higher copays, "employees quit filling prescriptions for chronic conditions, with as many as 21 percent at one employer giving up taking cholesterol-lowering statins."

With health plan members forced to make separate purchasing decisions after their physician hands them a prescriptionpharma managed-care executives will need to address consumer-member marketing if they are to realize market share success at the plan level. This dual focus in health plans—structures to facilitate demand before a script is written, and share of mind to lock in demand after the script is written—represents a new marketing horizon. The following principles may serve internal planning discussions as pharma managed-care divisions prepare for this emerging industry development:

• Material for member marketing should flow from brand marketing, but the approach and methods will need to be health plan-specific
• Member marketing should be framed by a given health plan's formulary, co-pay differences, and competitive product match-ups.
• Account directors may need to play a more integrated role with field sales in both the planning and implementation of member marketing.
• Patient rebates (as opposed to health plan rebates) tied to compliance and implemented online may be worthy of exploration. Superior core competency in patient rebating could create a competitive advantage.
• Patient rebates (as opposed to health plan rebates) tied to compliance and implemented online may be worthy of exploration. Superior core competency in patient rebating could create a competitive advantage.

Horizon Two: Marketing Through Evidenced-based Commodification Evidenced-based medicine is a little like mom and apple pie. Who could take issue with it? The problem for pharma is that evidenced-based medicine is a double-edged sword. On one hand, it promises to improve quality in everyday medical practice. On the other hand, it promotes tendencies to commodify products by locking in a specific product category in

clinical decision making and minimizing product differences within categories. Evidenced-based medicine comes down squarely on the side of class effect, product interchangeability, and "me-too" reasoning—until proven otherwise

It's axiomatic now that there's a quality chasm in American medicine and that practice variation is a root cause. There is also an emerging consensus among employers, federal policy makers, and managed-care executives that a more aggressive adoption of evidenced-based medicine can be a powerful corrective. As a practical matter, this translates into the use of guidelines, pathways, and protocols, all of which are intended to standardize medical treatment around scientifically validated data and best practices

Recently, a "pay-for-quality" movement has emerged to extend the reach of evidenced-based standards across mainstream medicine. Hospital and physician scorecards, long a staple of managed care, are at the center of renewed efforts to reward evidenced-based practices. Significantly linking provider scorecards to increased payment appears to be gaining employer support. In addition, Medicare has weighed in on the guideline/protocol front with the prospect of increasing payment to physicians who take better care of patients with chronic illnesses

Quality Commodification Three factors suggest widespread incorporation of evidenced-based medicine in routine physician decision making. First, the need to systematically improve quality has gained rapid acceptance. Second, adoption of standard guidelines and protocols is seen as a way to also control costs. And finally, the technology for industrywide implementation through physician-friendly point of care and wireless systems is now readily available

Although physicians are not inclined to absorb the cost of these systems, if recent headlines are a sign, health plans, provider networks, and pharmacy benefit managers (PBMs) are, to different degrees, stepping up efforts to promote adoption of e-prescribing tools and web-based functionality—all of which have the capacity to lock physicians into evidenced-based practices

The new horizon for pharma managed-care marketing will be defined by increased product commodification justified not by cost but by quality. Traditionally, products are reduced to commodities because cost trumps differentiation. While cost-driven commodity environments pose considerable marketing challenges—the pharmacy director may be more "finance oriented" than average or a pharmacy and therapeutics (P&T) committee more "skeptical" than average—pharma can attack commodification by addressing the customer's value proposition. Usually, this occurs in one of three ways: being low cost; bundled contracting; or partnering to produce greater value with program support

In an emerging evidenced-based commodity environment, pharma will need to address quality-driven imperatives that standardize treatment rules by requiring adoption of consensus guidelines and protocols. Superficially, this will look like current utilization management that uses step therapy, therapeutic substitution, system edits, and prior authorization. Unlike current utilization management, though, these methods will be linked, not to situational cost concerns but to an "objective need" for establishing consistent quality of care across all network providers.

It appears there are at least seven disease states where practice variation in physician prescribing is a problem and efforts by managed-care stakeholders are likely to coalesce: asthma, chronic obstructive pulmonary disease, diabetes, gastrointestinal disease, hypertension, heart failure, and myocardial infarction. With the potential for huge Medicare growth in managed care beginning in 2006, one MCO pharmacy executive in a recent interview suggested that Alzheimer's disease could be another area for evidenced-based, quality-driven commodification. His reasoning is instructive